Silver Price Forecast: Targets And How To Turn Them Into Wealth

My analysis suggests silver prices will make a substantial bottom sometime in 2016, and from that bottom prices could ascend to virtually unthinkable levels. In this exclusive article, I will cover short, intermediate and long-term price targets along with my thoughts on how to convert potential silver profits into lasting wealth.

There are no guarantees silver will reach the prices discussed below. I use several charting theory and various analytical techniques to arrive at potential targets. The target boxes (below) are estimates, I often need to alter or adjust these targets as data becomes available, and the price structure develops. Fundamentally, I see excellent industrial applications for silver as well as sound investment demand. If silver prices successfully break out above the $50.00 level, supply shortages could make the potential price targets reality.

First let’s start with the shortest timeframe and discuss where prices may be headed near-term. Silver prices appear close to forming a top and may do so within the next 1-2 weeks. I will be watching for potential topping patterns in or around the green target box (shown below). I don’t expect prices to carry much past the $16.20-$16.60 area and as usual Premium subscribers will receive updates throughout the week as conditions change.

In the chart below we will zoom out somewhat and look at the weekly view. Here you will see a pattern of cycles topping at or near the 50-week moving average (currently at $16.31). If this trend remains prices will top soon and then head lower into December forming the next biannual cycle low.

Next I want to show the “big picture” view using the quarterly chart, which expands back to 1970. Here I have illustrated a cup with handle technical pattern. This pattern has a specific target that is figured by adding the height of the cup to the top of the pattern ($50). This measurement target’s approximately $300 silver (see the previous article).

Will Silver Prices Hit $300 An Ounce?

There’s no guarantee, and frankly it’s probably unlikely. However, if it does the potential gains could be life changing and, therefore, warrants further evaluation. The remaining part of this article looks at ways to take advantage of potential price moves.

Physical Silver Bullion

I usually recommend coins from recognized mints such as Canadian Maples or American Eagles. Silver rounds and bars are much easier to counterfeit than government coins. In the later stages of this bull market, falsified items will hit the market, and certain products won’t be trusted and become difficult to sell.

Silver Miners ETF (SIL)

It offers diversity and, therefore, reduces the risk often seen with individual companies, but it doesn’t pay much of a dividend (currently 0.09%).

Silver Wheaton (SLW)

This silver streaming company has a program to pay out 20% of the trailing quarter's cash flow through dividends. At much higher silver prices, the dividends could become very attractive. However, in an attempt to stabilize profits silver Wheaton diversified into gold streaming as well and by 2016 approximately 40% of their sales will come from gold. This makes the company less leveraged to higher silver prices and with all companies there is specific company risk.

Lastly, gold and silver are wonderful stores of value, but I don’t necessarily consider them an asset (something that pays income/dividends). If silver hits the target areas above, I will convert any profits into dividend paying assets. On my website, I give an example of buying and holding Johnson and Johnson (JNJ), and I explain how dividend growth is the secret to wealth creation. Below is a ratio chart of JNJ vs. an ounce of silver. Currently the ratio is 0.1658, meaning it currently takes approximately 6 ounces of silver to buy just one share of JNJ ($95.37). If the above scenario plays out, this ratio could return to 5:1 (1-ounce of silver would buy 5-shares of JNJ). That would be an excellent opportunity to convert silver profits into quality blue chip stocks.

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Pierce Wellington is the Senior Technical Analyst and head trading consultant at Chartseek.com. After making unwise trading decisions early in his investing career, he developed a passion for education and Technical Analysis. His pursuit for educating beginning investors started in 2012 and Chartseek.com was created after that. He has been actively trading the Gold and Silver markets for over a decade and is currently pursuing the esteemed Chartered Market Technician (CMT) designation, which he should complete by May of 2016.